StockWatch (Jun 25-29, 2012): PSEi, MEG

 PSEi (Chart: Daily      Resistance: 5156         Support: 4964)

Events from last week’s trading was positive, with the index regaining its loses from the previous week. 

We can now see a possible slight upward shift in the sideways movement of the index as it was able to create a new high since the major downward trend that happened last May.  Albeit slightly upward, this is still a sideways movement for the index ranging between approximately 5156 and 4964.

There are no negative divergences that can be seen from the chart; both MACD and RSI are in-synch with the movement of the index.

The index has now established a pattern, that of a sideways movement, and it is currently following resistances and support areas.  So for the coming weeks, range trading strategy is recommended.

MEG (Chart: Daily     Resistance: 2.26          Support: 1.90)

MEG caught my attention because of a very noticeable volume and price pattern.  The ongoing trading action for MEG seems to be forming a cup and handle formation, with volume increasing as the right side of the cup is being formed.  

With the inability of the stock to support further upward movement last Friday, this may signal the start of the handle formation.

Generally a cup and handle formation is a bullish continuation pattern. Considering the recent upward trading activity in MEG since the start of the year, we may be seeing the return of MEG towards the previous high created last Nov 2010.   However, there are still a lot of resistance levels that it needs to overcome, but nonetheless, MEG is slowly knocking out one level at a time.

If the cup and handle formation does materialize, it has a potential upward target price of 2.55, slightly just above another resistance level at 2.48.

StockWatch (Jun 18-22, 2012) PSEi

 PSEi  Weekly Chart

PSEi (Chart: Daily      Resistance: 5109         Support: 4929/4909)

Apologies if I haven’t been posting any analysis on the blog for a month. I was on a month long job assignment outside of the country and I wasn’t able to monitor the local stock market.

I was surprised that a lot has happened for a month, particularly with the index falling 400 points on May and more recently the 200 point drop from last week’s trading.

A lot may be wondering where the index is headed, and from the looks of the daily chart, the index is still in a sideways movement between 5109 and 4909.   With the RSI chart, we can see that the index is definitely undecided where to go as seen by the zigzagging action, crossing above and below the 50 RSI level for 3 weeks now.

However, looking at the weekly chart, particularly the MACD opening wide downward, the index is more likely to move lower in the long term, so it is possible that what we are seeing now is just a pause before the continuation of the downward movement.

For next week, if the index continues to move lower than the support line at 4909, then this would be a breakdown of the current sideways channel. Target level for this would be near 4700.   I would suggest staying on the sidelines for the mean time until at least the MACD has crossed above the center line again.